Relating to the Texas Property and Casualty Insurance Guaranty Association.

89(R) HB 4877 - Engrossed version - Bill Text

By: Paul

H.B. No. 4877

A BILL TO BE ENTITLED

AN ACT

relating to the Texas Property and Casualty Insurance Guaranty

Association.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 462.004(4), Insurance Code, is amended

to read as follows:

(4) "Claimant" means an insured making a first-party

claim
,
[
or
] a person instituting a liability claim
, or a workers'

compensation claimant
.

SECTION 2. Section 462.007(b), Insurance Code, is amended

to read as follows:

(b) Except as provided by Subchapter F, this chapter does

not apply to:

(1) life, annuity, health, or disability insurance;

(2) mortgage guaranty, financial guaranty, or other

kinds of insurance offering protection against investment risks;

(3) a fidelity or surety bond, or any other bonding

obligation;

(4) credit insurance,
guaranteed asset protection

insurance that protects a lender's or borrower's interest if the

amount owed on an asset exceeds its value,
vendors' single-interest

insurance, collateral protection insurance, or similar insurance

protecting a creditor's interest arising out of a creditor-debtor

transaction;

(5) insurance of warranties or service contracts;

(6) title insurance;

(7) ocean marine insurance;

(8) a transaction or combination of transactions

between a person, including an affiliate of the person, and an

insurer, including an affiliate of the insurer, that involves the

transfer of investment or credit risk unaccompanied by the transfer

of insurance risk, including transactions, except for workers'

compensation insurance, involving captive insurers, policies in

which deductible or self-insured retention is substantially equal

in amount to the limit of the liability under the policy, and

transactions in which the insured retains a substantial portion of

the risk; or

(9) insurance provided by or guaranteed by government.

SECTION 3. Section 462.017(b), Insurance Code, is amended

to read as follows:

(b) Venue in a suit by or against the commissioner or

association [
relating to an action or ruling of the commissioner or

association
] under this chapter is in Travis County. The

commissioner or association is not required to give an appeal bond

in an appeal of a cause of action arising under this chapter.

SECTION 4. Section 462.054, Insurance Code, is amended to

read as follows:

Sec. 462.054. ELIGIBILITY TO SERVE AS INDUSTRY

REPRESENTATIVE. To be eligible to serve as an insurance industry

board member, an individual must be
an officer or
a full-time

employee of a member insurer
or affiliated entity
.

SECTION 5. Section 462.105, Insurance Code, is amended to

read as follows:

Sec. 462.105. ACCOUNTS. For purposes of administration and

assessment, the association
maintains the following four accounts

[
is divided into
]:

(1)
the administrative account;

(2)
the workers' compensation insurance account;

(3)
[
(2)
] the automobile insurance account; and

(4)
[
(3)
] the account for all other lines of insurance

to which this chapter applies.

SECTION 6. Section 462.156(a), Insurance Code, is amended

to read as follows:

(a) The amounts provided under assessments made under this

chapter supplement the marshalling of assets by the receiver under

Chapter
443
[
442
] to make payments on the impaired insurer's

behalf.

SECTION 7. Sections 462.308(a), (b), and (c), Insurance

Code, are amended to read as follows:

(a) The association is entitled to recover:

(1) the amount of a covered claim and the cost of

defense paid on behalf of a person:

(A) who is an affiliate of the impaired insurer;

and

(B) whose liability obligations to other persons

are satisfied wholly or partly by payment made under this chapter;

[
and
]

(2) the amount of a covered claim for workers'

compensation insurance benefits and the costs of administration and

defense of the claim paid under this chapter from an insured

employer or any successor entity to the insured employer under

state, federal, or international law whose net worth on December 31

of the year preceding the date the insurer becomes an impaired

insurer exceeds $50 million
; and

(3)

the amount paid under any policy, including the

costs of administration and defense of the claim, from an insured or

any successor entity excluded by Section 462.212(a) before the

insured's identification as an insured whose net worth on December

31 of the year preceding the date the insurer became an impaired

insurer exceeds $50 million
.

(b) The association is not entitled to recover under

Subsection (a)(2)
or (3)
against an insured who is exempt from

federal income tax under Section 501(a), Internal Revenue Code of

1986, by being described by Section 501(c)(3) of that code.

(c) For purposes of
Subsections
[
Subsection
] (a)(2)
and

(3)
, an insured's net worth is deemed to include the aggregate net

worth of the insured and of the insured's parent, subsidiary, and

affiliated companies computed on a consolidated basis.

SECTION 8. Section 462.309(a), Insurance Code, is amended

to read as follows:

(a) To permit the association to properly defend a pending

cause of action, a proceeding in which an impaired insurer is a

party or is obligated to defend a party
or a proceeding asserted

directly against the association arising out of a policy issued by

the impaired insurer
in a court in this state, other than a

proceeding directly related to the receivership or instituted by

the receiver, is stayed for:

(1) a six-month period beginning on the later of the

date of the designation of impairment or the date an ancillary

proceeding is brought in this state; and

(2) a subsequent period as determined by the court, if

any.

SECTION 9. Except as provided by this section, the changes

in law made by this Act apply only with respect to a property and

casualty insurance company that is designated as an impaired

insurer on or after the effective date of this Act. The law as it

existed immediately before the effective date of this Act applies

with respect to a property and casualty insurance company that is

designated as an impaired insurer before the effective date of this

Act, and that law is continued in effect for that purpose.

SECTION 10. This Act takes effect September 1, 2025.